Wetherspoon’s Tim Martin hits out at pub VAT and business rates

By Hannah Thompson contact

- Last updated on GMT

Wetherspoon’s Tim Martin hits out at pub VAT and business rates

Related tags: Pubs, Tax, Value added tax

Wetherspoon chairman Tim Martin has again hit out against the VAT and business rates paid by pubs, saying that they are “killing pubs”.

Martin, who is well-known for his outspoken views on everything from VAT to the sugar tax to Brexit, has criticised the rates ahead of the expected rise in pub rating tax assessments from April 2017, the rise in the living wage amount, also expected for April, and the 20 per cent VAT charges for pubs.

His argument centered on the fact that, he said, the pub trade will be forced to raise its prices far higher than supermarkets, thanks to pubs’ higher business and VAT rates. This would, he said, make pubs unfairly expensive in comparison to supermarkets.

After consulting data from Dalton Phillips (former chief executive of Morrisons) and Sainsbury’s accounts, he said, Martin claims to have calculated that pubs pay about 18 pence per pint on an average price of £3.60, versus the two pence per pint paid on the average supermarket price of £1 per pint, excluding VAT.

He also said that should pub business rates increase in April as expected, pubs will be forced to raise prices by an average of seven pence per pint, while supermarkets appear unlikely to be as affected, he claimed.  

Living wage rises

The forthcoming rise in the living wage (expected in April 2017) was also highlighted as a potential issue, Martin said, claiming that labour costs in pubs are significantly higher per pint than those of supermarkets.

He said supermarket accounts showed that supermarket wages were at 10 per cent of sales, versus 30 per cent in pubs. This could mean supermarkets pay just 10p per £1 pint towards wages, compared to the 90p paid by pubs for each £3-plus pint.  

The VAT on food

Martin also joined the current debate on the 20 per cent VAT paid on food by pubs and restaurants, saying that “an identical sandwich bought in a pub attracts 20 per cent tax in a pub, and nothing in a supermarket”. He called this the “biggest sword of Damocles over the industry”.

He said: “The pub industry is always competing with one arm tied behind its back. The playing field is anything but level. Pubs contribute to society in many ways, including their role as a huge employer and contributor to the exchequer.

“We understand that society and governments need taxes - and we also want and need to pay our staff well. However, if the pub industry is to survive and thrive in the future, equality of taxes with supermarkets is vital. The message from the industry needs to ring out loud and clear ‒ lower excise duty is important, but tax equality is paramount.”

Business rates and VAT: An ongoing issue

Martin’s comments come in light of calls from the All-Parliamentary Save The Pub Group, which recently asked the government to review the new business rates system before automatically implementing it in April. Under the new rates, bills for urban pubs have been estimated to rise by over 25 per cent over the next five years.

Similarly, the claims come soon after the Association of Licensed Multiple Retailers (AMLR) and the British Beer and Pub Association (BBPA) wrote to 40 Conservative MPs, as part of the ongoing VAT Campaign movement ‒ asking them to consider reducing the 20 per cent VAT rate on food and drink.

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